Originally from Journal of Damages in International Arbitration

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Lord Hoffman: Thank you for inviting me to give this introduction to what I hope will be an interesting discussion. I must start by confessing that I am a dyed-in-the-wool common lawyer and not an international lawyer. In fact, I have never heard of the nitrate factory at Chorzów and I have taken advice on how you pronounce it, still not being sure I have got it right. So I haven’t been able therefore to refrain from drawing certain comparisons between the damages jurisprudence in international law and that of common law which I hope you may find illuminating. 

Now the general statement of principle in Chorzów, the one which is always quoted, is that “reparation must as far as possible wipe out the consequences of the illegal act and re-establish the situation which in all probability would have existed if that act had not been committed”.  So it treats the question as essentially one purely of causation. You assume the wrongful act had not been committed and you then ask how in that hypothetical world events would have unfolded and the damages are to recreate that hypothetical world.